Beyond Windows and Office, when has Microsoft become the dominant player in a market it covets? It’s either a distant second-place player or a complete loser in palmtops, digital music formats, online services, set top boxes, game consoles, phones, and other areas it’s set out to conquer, no matter how many hundreds of millions of dollars it spends. If Microsoft were truly the quality-driven innovator it claims to be, surely it would have claimed the #1 spot in some of these other categories.
Instead, according to an article this week in The Financial Times, the numbers tell the real story: Microsoft’s Xbox game division lost $177 million last quarter, its MSN online service lost $97 million, its application-software division lost $68 million, and its palmtop division lost $33 million. The only profits at Microsoft, in fact, came form its Windows monopoly money: $2.84 billion. (If there’s any doubt that Microsoft is abusing its monopoly, that’s an 85 percent profit margin.)
There’s more good stuff in this one column. Many people have questioned MSFT’s claim to innovation, but no one has laid out all the pieces for me as clearly as this. This of course underscores why breaking the company into Baby Bills is so frightening: most of them would die quickly.